Wednesday, January 29, 2014

It turns out that it depends on where you are, as much as the type of improvement you are planning to make. Below are two infographics - 1 showing projects with not such great returns, and one showing those that have the best returns; these are provided by the California Association of Realtors and therefore are more appropriate for California.

However, my experience is that here in the Bay Area of San Francisco, the returns are better than what would be typical anywhere else in the US. In fact, this is something that one can verify by going to the "cost vs Value" web site link from this page out of the online Realtor magazine , and looking for instance at the "Pacific zone" and in particular " San Francisco", where the return for a kitchen remodel or a 2nd bath remodel will indeed be in most cases over the cost of the improvement.

(Click on the picture to enlarge)

As always, thank you so much for reading, and if you like what you read, let your friends know!

Thursday, January 23, 2014

Adjustable-rate mortgages are again gaining in popularity
despite practically vanishing during the housing bust. Since home prices and
interest rates rose last year, more people have turned to adjustable mortgages
to keep their monthly payments affordable, with such mortgages offering a lower
initial rate. However, careful! - the rate can rise over time with market changes.

Also, Households saved just 4.2 percent of the after-tax income in November. The
average was close to 6 percent from 2009 until 2011. Wealth gains from existing
assets, such as rising home values, may explain why households are saving
less, according to this blog from the Wall Street Journal.

Are we back to what I call "aggressive financial living"? Hum, a trend to keep an eye on...

Friday, January 17, 2014

December 2013 U.S. Economic and
Housing Market Outlook
Freddie Mac released its U.S. Economic and Housing Market Outlook for December
showing that housing affordability is being challenged as the year comes to an
end.

Highlights from the Freddie Mac Study show that:

At a 4.4 percent interest rate
for a 30-year fixed-rate mortgage that prevailed in the third quarter of
2013, more than 70 percent of the country remained affordable. All of the
North Central region remained affordable, while just 36 percent of the
West remained affordable.

At a 5 percent rate (and no
change in prices/income) approximately 63 percent of the country would be
affordable, at 6 percent mortgage rates 55 percent would be affordable,
and at 7 percent mortgage rates only 35 percent of the country would be
affordable.

On the plus side, existing homeowners' housing
payment-to-income ratio has fallen to an average of 7.9 percent, its
lowest level since 1980, a positive sign for sustainable homeownership.

Friday, January 10, 2014

The rise in interest rates may be a challenge for the real estate market in 2014, (although I have to point out: this is nationwide):

During 2013, increases in mortgage rates corresponded with declines in home
buying, and in light of shifts in the Federal Reserve’s monetary stimulus
effort, the trend is expected to continue.

When the Fed first announced it would consider scaling back its bond-buying
program, mortgage interest rates spiked in May. As a result, the seasonally
adjusted annual rate of new home sales dropped by 4 percent from the prior
month.

In contrast, mortgage rates dropped by three-tenths of a percentage point
during October just as new home sales surged 18 percent.

In mid-December, the Fed announced that it will begin tapering its asset
purchase program, but the Fed is only reducing its monthly buys of mortgage
securities and Treasuries by just $10 billion.

- If mortgage interest rates increase a little, some analysts have stressed
that any such rate increases will see the recovery slow rather than reverse.

The interest rate on U.S. Treasury notes is also increasing, which could
signal higher interest rates ahead because it is used as a reference point for
the cost of borrowed money for U.S. consumers and businesses.

Friday, January 3, 2014

To piggy back on my last blog, let's look at values in our part of the Bay Area of San Francisco (Silicon Valley).

To keep some perspective on the market in our counties, let's look at the graphs (past 2 years) of the average sales price for residential housing (houses, and PUD's combined, which include all townhouses and condominiums),
in the County of Santa Clara first:

(click on the graph to enlarge)

For this County, the ratio of the Sales Price to the List Price follows the curve below, which shows that from March to May of 2013, the market was the most heated:

------------------

Looking at the County of San Mateo, for the same statistics:

... and the ratio of Sales Price to List Price, which shows that in that County the market remained even more heated and unbalanced than in the County of Santa Clara, for the 2nd half of 2013.

A few things to note:

- another thing to remember when looking for a home in both Counties﻿ is that as an average, prices are higher in San Mateo County than in Santa Clara County;

- the overbidding was just starting to warm up in 2012;

- finally, something that is noticeable from the stats is that prices did not go down much at the end of each year, from the highs of the middle of the year. This is somewhat of a new phenomenon that I had mentioned in an earlier blog (last year in November).

Interested in local statistics for your own neighborhood, and the value of your assets? Just let me know, I'll be glad to study it.

To keep things in perspective, which is always nice when you live in the Bay Area of San Francisco, I thought this article was worth reading.

According to the California Budget Project, a nonpartisan research group, many
California families are struggling from paycheck to paycheck, and expensive
housing, high childcare costs and rising healthcare expenses are the main
factors. Nearly one-third of households in the state spent at least half their
income on rent.Full article from the LA times, which also includes links to the richest and poorest cities in the US. Source: LA Times - by Shan Li.Happy New Year! and thank you for reading,FrancisSilicon Valley real estate specialistDetailed, local trends etc...
Current mortgage rates